LUNA 2.0 price prediction: A new life for Terra

Terra is seeking a resurgence with the launch of its new blockchain and cryptocurrency

The LUNA logo in front of a blue background                                 
70% of the token’s supply will be distributed to previous holders of LUNA – Photo: Shutterstock
                                

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Click here for our ultimate guide to Terra Luna 2.0.

Terra was one of the most successful cryptocurrencies out there. It was revolutionising the industry with its algorithmic stablecoins, which maintains a constant price by minting and burning depending on another asset.

But at the beginning of May 2022, the crypto project was shattered. TerraUSD (UST) lost its $1 peg and LUNA plummeted in price.

After this crash, it was assumed to be game over for the Terra ecosystem. Not only had its cryptocurrencies crumbled, but it had lost the trust of its investors. However, Do Kwon, the founder of parent organisation Terraform labs, was determined to turn things around.

Terra’s founder put a governance proposal to the community, successfully persuading them to allow a new, updated blockchain to be launched.

With Terra 2.0 only recently going live on 27 May 2022, there is still much undetermined about the future of this new blockchain. Most importantly for Terra is whether it can reclaim the trust of investors and turn its reputation around. As of the morrning of Monday 30 May, Luna 2.0 was trading at around $6.15, down two thirds from its launch price, as investors airdropped the coin seem to have sold it as soon as they got it.

What is Terra LUNA 2.0?

When looking to dramatically change a blockchain, most choose a hard fork. This allows projects to keep some of its old data while implementing network-altering improvements. However, Do Kwon has opted for an entirely new blockchain. The developers said Terra 2.0 is a completely new project that will have no data from the original network.

This new Terra blockchain will have the same name with its native cryptocurrency under the same LUNA ticker. Meanwhile, the old project has been rebranded to Terra Classic and the token’s name changed to LUNC.

As well as being able to purchase, these new tokens will be airdropped to original holders of the LUNC cryptocurrency.

One of the defining features about Terra 2.0 is its choice to leave behind UST. This decision is significant as the stablecoin was central to the ecosystem. On the other hand, it was also Terra’s Achilles heel with the depegging bringing down the blockchain.

In a turn of events, LUNA 2.0 is receiving support from a number of major crypto exchanges, who delisted the original cryptocurrency after the crash.

OKX is contributing to the airdrop of the new tokens, Huobi is supporting the launch of the new LUNA token, while Binance is working with Terra to provide reparations to Binance users who were impacted by the crash.

However, not all are convinced. Most South Korean exchanges are showing a reluctance to list the updated cryptocurrency. Terra’s poor reputation after the crash could now act as a stumbling block for the new ecosystem.

Token redistribution

The rejection from some exchanges is not surprising as investors lost millions of dollars as a result of Terra’s crash. Do Kwon has noted this and created tokenomics to pay back at least a portion to previous holders.

Two snapshots have taken place, one on 7 May 2022 before the crash and another on 26 May 2022 a day before Terra 2.0’s launch. This acted as a recording of token holders on those specific days. Those that appear in the snapshot are receiving a portion of LUNA 2.0.

According to Do Kwon’s passed proposal, 70% of the total tokenomics will be distributed to these holders. However, when holders see these funds returned to their wallet will depend on the amount they initially held.

Investors who owned more than 10,000 LUNA will receive 30% immediately and 70% over the next two years. Meanwhile, holders with over a million LUNA will have to wait a year for their tokens, which will be followed by a four-year vesting period. These are anti-dumping measures, to stop investors from immediately selling.

Terra’s developers

Terra has also noted the important role that developers played in supercharging its blockchain into the top 10 last year. Do Kwon said in the proposal: “While UST has been the central narrative of Terra’s growth story over the last year, the distribution of UST has led to the development of one of the strongest developer ecosystems in crypto.”

To motivate developers to continue working on its new blockchain, 10% of LUNA 2.0’s total supply has been dedicated to this community.

There are three methods that developers can earn the new token. After committing to building a product on the new ecosystem, they will receive LUNA. However developers will have to return the funds if the product has not launched in a year.

Tokens will also be sent to the active teams in the Terra Classic blockchain. But, the highest proportion goes to “essential app developers”, who will receive mining proceeds every quarter for four years.

Terra LUNA 2.0 price prediction

LUNA’s tokenomics will be an important factor of its future price. It has even gone for a low circulating supply of 116.7 million in 2022 to ensure there is no highly inflated supply.

Bull is Coming’s LUNA 2.0 price prediction is optimistic over its future because of this. It lists the vesting period for investors as the main reason. However, the LUNA 2.0 coin price prediction also calculated that “the new token must reach a $50 market price before preattack holders (old chain token holders) could get their capital back. Hence, there might be a bullish move.”

The LUNA 2.0 crypto price prediction from Business 2 Community is less impressed. It noted investors are still apprehensive to jump on board a failed project. It wrote: “The crypto community now has concerns about investing in Luna 2.0, given the scandal surrounding the collapse of the old Terra blockchain. One user raised doubts about the new chain’s long-term viability, asking why anyone would want to invest in the new blockchain.”

CryptoNewsZ’Terra 2.0 price prediction for 2022 expects the cryptocurrency to recover but recognised it is “under significant bearish pressure”. It gave a maximum level of $0.00026 for this year. It expects this to only increase by $0.0008, according to its Terra 2.0 price prediction for 2030.

Meanwhile, WalletInvestor thinks it can reach new heights. In a year’s time LUNA is said to reach $61.89. Its Terra 2.0 price prediction for 2025 thinks it can pass $250 by the end of the year.

Unanswered questions

Having only launched on 27 May 2022, there is still uncertainty and unknown factors about Terra’s new blockchain. For example, Bloomberg noted how there was no plan for returning tokens to Ethereum wrapped versions of LUNC.

Do Kwon’s quickly produced plan to revive Terra could bring life to the crashed ecosystem. However, only time will tell whether it is a perfect solution and can assure investors. 

FAQs

For 2022, there will be a circulating supply of 116.7 million LUNA.

It might be. Terra is creating a new blockchain to bring life back into its ecosystem. However, its recent crash could see investors and users reluctant to join the revived project. Remember, you should always conduct thorough due diligence before investing.

It depends on who you ask. WalletInvestor thinks it can reach a new all-time high, while CryptoNewsZ argues it will continue to see bearish pressure. LUNA has proved to be incredibly volatile, so you should never invest more than you can afford to lose.

The Terra LUNA crash saw investors lose millions of dollars in funds. Do Kwon is hoping to rebuild its blockchain and reputation, but not everyone is convinced it can. Investors should always carry out their own research before buying the new LUNA.

Further reading

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